The average cost of home insurance fell by 3% last year, according to the latest data from Consumer Intelligence.

Why? It is one area of the personal lines insurance market that insurers seem to like, viewing it as a highly competitive sector that is full of opportunity. It has also traditionally been a sector where customers are loyal and, compared to the car insurance market, tend to stay with the same provider year in year out. The fact that many homeowners have their mortgage and insurance connected is one of the key reasons for this loyalty. Good business for insurers.

And up until last December, there had been persistently low claims pressure. The winter storms from Abigail to Imogen have left a trail of destruction in their wake, leading some in the industry to question if household pricing levels need to be raised. In reality, I suspect that while there will be some underwriters sharpening their pencils, the leading insurers will have made allowances for bad weather incidents in their forecasts.

However one of the biggest influencers on falling premiums is consumers shopping around. Previously loyal homeowners are using price comparison websites to look around for cover, creating demand pressure and forcing prices down further. According to one market commentator customers are now only loyal to a certain extent. If premiums are similar and consistent, they tend to stick but if there are significant changes to price or cover, they will move.

Given the competitiveness of the market, those insurers who want to maintain or grow their share of the pie will need to ensure their products are keenly priced.

The good folk at Consumer Intelligence think there will be some hardening of rates while the 2016 household premium outlook from PWC is a mixed bag. In their view, for those not affected by this winter’s storms, competition between insurance companies for their business is increasing, meaning that people can hope to renew their policies for lower premiums.

Interestingly, consumers aren’t just looking at price. The claims service they receive from insurers can influence decisions and so it isn’t just the underwriters that have their work cut out for them. Claims departments are reviewing their processes to make them smoother as well as achieving cost savings, and the use of technology is likely to play an increasingly important role – for example helping insurers to manage the repair supply chain to cut down waiting times.

With this in mind, I think it’s likely that we’re going to see greater transparency amongst insurers as they seek to establish their customer-care credentials – for example Aviva recently started publishing customer reviews on its website. A happy customer is, after all, a brand’s best advocate. So those insurers that truly focus on their customers, offer fair value and deliver higher levels of customer satisfaction are likely to achieve greater loyalty in return.

Of course, we’re yet to see what impact the implementation of Flood Re will have on premiums once it is rolled out in April. So household premiums – up or down in 2016? I tend to agree with PWC in that it is likely to be a mixed bag however I do think that many intermediaries are going to be able to look forward to securing their clients some good deals over the coming months.

Brian Coulton is head of sales at Source Insurance